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The man, who had been making threats to kill, was pronounced dead at the scene, the Metropolitan Police said. A non police firearm was recovered.
The incident has been referred to the Independent Police Complaints Commission (IPCC) for investigation.
Richard Nyarko, 48, who lives on the eighth floor with a flatmate, said: “I heard a noise – three or four shots, definitely three or four. After about 20 minutes. I came out on to my balcony and saw armed police outside the front entrance.”
The police had their “guns drawn” and were “all over the place”, he said.
Bob Mallick, 62, who lives on the fifth floor with his wife and daughter, said he was “shocked and appalled” by the shooting.
He added: “This kind of thing never happens here.
“We don’t run around scared, the place is full of hard-working families. The one thing I don’t want anyone to think is that this is in any way is a dysfunctional or troubled… neighbourhood to live in.”
IPCC investigators attended the scene of the shooting this morning. A forensic examination of the scene has taken place and initial house to house inquiries have been carried out.
Commissioner at the IPCC Cindy Butts said: “Fatal police shootings are rare but require thorough independent scrutiny when they do occur. Our investigators are gathering all of the evidence to understand the full circumstances of what happened.”